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Money and the Professor

Moshe A. Milevsky, a rabbi's son, loves to give advice. But he himself has consistently refused to take any -- at least conventional-wisdom career advice.

And therein lies the key to his success. As a Yeshiva University undergrad, he was urged to forget his fascination with high-level algebra and physics -- courses he loved taking -- and instead start studying accounting. "You'll be unemployed in the real world! Become a CPA.!" many told him. Later, after he earned a Ph.D., fellow academics warned: "No! Don't write a book at this stage of your career! Wait 10 years! Now you should focus on writing articles!"

"I hate to sound like Frank Sinatra -- but I did my way," explains Milevsky, associate professor of finance at the Schulich School of Business, York University, in Toronto. His work at York has Milevsky, who speaks in the snappy rhythm of a stand-up comic and has a sly, self-deprecating wit, teaching folks about all things financial. The Toronto native, 38, is also founder and executive director of the Individual Finance and Insurance Decisions, at York, which produces research on specific decision-centric financial issues (www.ifid.ca).

As a consultant to insurance firms and brokerages, Milevsky is a leading expert on the vast -- oft-maligned -- universe of annuities.

Apart from publishing more than 40 scholarly research articles, he is the author of several mass market books, including the Canadian bestseller, "Money Logic" (Stoddart 1999), plus "Wealth Logic" (Captus 2002) and "Insurance Logic" (Captus 2004).

"Moshe is that rare academic who has blended academic rigor with practical knowledge and common sense. It makes his work approachable and usable by practitioners like me," says Harold Evensky, of financial advisors Evensky & Katz, in Coral Gables, Fla. Milevsky has contributed chapters to books penned by Evensky and partner Deena Katz.

Now available is Milevsky's own brand-new book, "The Calculus of Retirement Income: Financial Models for Pension Annuities and Life Insurance" (Cambridge University Press). As you might guess, it wasn't written for the average consumer.

"This isn't something to breeze through before you go to bed," cracks the author. However, most advisors will find much information -- some of it quite chatty -- and many statistical tables enlightening. To be sure, the book's premise, how to avoid retirement ruin, is tantalizing and well-timed, given that baby boomers now find themselves eligible now for senior discounts.

Milevsky bluntly defines "retirement ruin" as "running out of money while you're still alive." To prevent this disastrous scenario, he recommends determining one's retirement ruin number about a decade prior to retiring. "The last thing you want to do is wake up in retirement to find out that you have a high retirement ruin number," he says. "This is the number you want to become more and more aware of as you approach retirement so you can start saving more or protecting your portfolio or thinking about getting a pension."

In his book, Milevsky quantifies the odds of retirement ruin occurring and delves into just how this all-important number is determined. He also supplies guidance on appropriate retirement investments.

Which leads to Milevsky's expertise in the annuity, "a catch-all phrase," he says, "for an enormous plethora of investments, some of which are horrible, some of which are widely under-appreciated. It's complicated; there are various shades of gray." To condemn annuities as a category, he says, is "like saying 'money is evil.' You've got to narrow it down. Unfortunately, 15-second sound-bites -- this is good, this is bad -- Suze Orman-style, don't work."

By adding annuities to a diversified portfolio, investors can tolerate more risk," he insists. Here, though, Milevsky is not referring to variable or fixed or tax-sheltered, etc., annuities. "I mean annuity as the term has been used for the last 400 years: a payment for the rest of your life no matter how long you'll live --otherwise known as a pension."

Though initially enamored of math and physics exclusively, Milevsky was "shocked...into the financial realm," he says, upon the early death of his father. Then 23, he returned to Toronto from New York City to help Mom care for a brood of younger brothers and sisters.

His dad was from Montevideo, Uruguay; his mother, born in Cleveland, Ohio. Milevsky grew up in Mexico City, Jerusalem and Tel Aviv, then attended the University of Maryland. In New York, he completed his undergrad degree at Yeshiva University. A summer gig as an actuarial trainee was a yawner, so he went back to school, receiving a Masters in math and physics, followed by a Ph.D. in financial economics, both from York. In 1995 he joined the faculty.

Milevsky's mom's work -- she's a gerontologist -- sparked his interest in retirement issues, such as, "Do we have the ability to manage money as we age?" It is melding this absorption with the human condition and his calling to academia that's driven Milevsky to create such a multidimensional career.

But being a financial advisor would "petrify" him. "I wouldn't be able to sleep at night if other people relied on me for their financial decisions. I have enough problems managing my own money," he quips. "My wife Edna just barely lets me make [financial] decisions. She laughs hysterically when big-time pension funds ask me for advice on billion-dollar decisions."

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